ADB and Vietnam on September 17 signed a US$151 million loan to help the country expand and improve electricity services in poor and remote communities.

The State Bank of Viet Nam’s Governor Nguyen Van Giau represented the Government, and ADB Country Director for Viet Nam Ayumi Konishi represented the ADB at the signing ceremony. Senior officials of Electricity of Viet Nam (EVN) and other government agencies were present at the ceremony.

In 2008, the electrification rate reached 91 percent of households in 97 percent of the country’s communes. The project will help the Government meet its long-term development strategy for rural electrification by increasing the number of electrified villages.

The project consists of two components. The first component will develop about 5-10 grid-connected run-of-river mini-hydropower plants in Lai Chau, Dien Bien and several other provinces in northern and central Viet Nam. Electricity connections will be provided to 25-50 villages in remote poor, ethnic minority areas, and about 100 GWh of clean renewable energy to the national grid.

The second component of the project will support the Government’s ongoing special program of supporting rural electrification of poor provinces inhabited by ethnic minorities. About 100,000 poor households in more than 1,000 villages are expected to benefit from this component.

The loan, in the form of Special Drawing Rights from the concessional Asian Development Fund, covers 76 percent of the project cost of US$197.6 million. Additional counterpart finance totaling US$46.6 million will be provided by three subsidiary companies of state utility, EVN. These three power companies will be the executing agencies for the project, which is expected to be completed by 2015.

The ADB is also providing a technical assistance (TA) grant of US$2.5 million, financed from the ADB-administered Climate Change Fund and from the TA Special Fund to support development of a renewable energy law and for capacity building. In addition, the Government and executing agencies will make in-kind contributions totaling US$400,000.

VietNamNet/VOV